EAST Africa maintained strong economic growth in the continent with Tanzania and Rwanda emerging among the 10 fastest growing economies in the world.
The African Development Bank (AfDB) said in its 2020 African Economic Outlook report unveiled last week that the East African region registered growth at an average of 5 per cent last year.
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Other regions that posted strong growth are North Africa as second fastest at 4.1 per cent, while West Africa’s growth rose to 3.7 per cent in 2019, up from 3.4 per cent the year before.
Central Africa grew at 3.2 per cent in 2019, up from 2.7 percent in 2018, while Southern Africa’s growth slowed considerably over the same period, from 1.2 percent to 0.7 percent, dragged down by the devastating cyclones Idai and Kenneth.
Rwanda posted highest growth rage at 8.7 per cent followed by Ethiopia 7.4 per cent, Côte d’Ivoire 7.4 per cent, Ghana 7.1 per cent, Tanzania 6.8 and Benin 6.7 per cent.
Tanzania’s growth is projected to be growing at 6.4 per cent in 2020 and 6.6 per cent in 2021, subject to favourable weather, prudent fiscal management, mitigation of financial sector vulnerabilities, and implementation of reforms to improve the business environment. It further points out that, Tanzania’s inflation fell to an estimated 3.3 per cent in 2019 from 3.6per cent in 2018 due to improved food supply.
The Tanzanian shilling was fairly stable in 2019, exchanging at an average of 2,290 to the dollar, compared with 2,263 in 2018.
However, the fiscal deficit, financed mainly by concessional external debt, stood at 2.0 per cent of GDP in 2019, up from 1.3 per cent in 2018, and is projected to stabilise at 1.9 per cent in 2020 and 2.2 per cent in 2021.
Overall, Africa’s economic growth stabilised at 3.4 per cent in 2019 and is expected to pick up to 3.9 per cent in 2020 and 4.1 per cent in 2021 but to remain below historical highs.
According to the report, Africa’s economic growth is forecast to rise to about 4 per cent this year and next from 3.4 per cent in 2019, driven by infrastructure investments and natural resource exports.
Growth last year was below the average 5 per cent rate of the past decade, the AfDB said in an annual report, due to slower growth in the continent’s “big five” economies Algeria, Egypt, Morocco, Nigeria and South Africa.
The expected acceleration in growth to 3.9 per cent in 2020 and 4.1 per cent in 2021 will be marked by a shift away from private consumption towards investment and net exports, the report said.
Last year was the first time in a decade that investment spending accounted for a larger share of GDP growth than consumption, the AfDB said.
The report said that higher oil prices were a significant contributor to the growth last year.
However, it added that only a third of countries have achieved inclusive growth and that, based on current trends, Africa is not on track to meet an international goal of eradicating extreme poverty by 2030.
In 2019, for the first time in a decade, investment expenditure, rather than consumption, accounted for over 50 per cent of GDP growth.
This shift can help sustain and potentially accelerate future growth in Africa, increase the continent’s current and future productive base, while improving productivity of the workforce.
The forecast described the continent’s growth fundamentals as improved, driven by a gradual shift toward investments and net exports, and away from private consumption.
The special theme this year is delivering education and skills for Africa’s workforce of the future.
Despite progress in recent decades, Africa still lags behind other developing regions in education and skill development.
It is proposed that policy actions should include measures to improve both the quantity and the quality of education and align education policy with labour market needs.
This requires expanding access to schools in remote areas, increasing incentives to invest in education, developing a demand-driven education system that caters to employers’ needs, investing in nutrition to help poorer children.
Government policy improving the business and investment climate remains a work in progress, states the report, particularly in tax policy and administration, access to affordable finance, and government processes.
Meanwhile, the 2019 Global Competitiveness Report pointed to some key improvements in ICT adoption, macroeconomic stability, financial system, and business dynamism, reports the outlook.